New numbers on commissions appear to back the concerns of embedded commission advisors worried a wholesale move by the industry to the fee-based model would hurt clients.

“Based on the numbers that were given (in that report), I don’t see how this is any different from trailer fees,” said Harley Lockhart, a financial advisor with Quail Ridge Financial Services.

“There’s so much being said about commissions and trailer fees and most of it, if not all, is completely (unfounded).”

His comments are a reflection on data from PriceMetrix released this week and tracking a growth in the average rate fee-based advisors collected on assets under their administration in 2014.

Not only did the percentage of fee-based assets in the average advisor’s book increase from 31 per cent in 2013 to 35 per cent in 2014, fee-based pricing also grew in 2014, rising from an average 0.99 per cent of assets in 2013 to 1.02 per cent last year. That’s the first increase in several year, according to the report.

The percentage of fee revenue also rose from 47 per cent to 53 per cent.

Lockhart is contrasting that against his own transactional model, where his company collects a 0.8 per cent trailer fee. The discrepancy between that and the fee based figure only heightens his concern about the possibility of an eventual ban on embedded commissions and the knock-on effect for clients, potentially.

“There’s lot of talk coming the way of commission-based advisors and I don’t see anything to say that the fee-based model should be the only option,” said Lockhart. “It shouldn’t be about what advisors get paid, but what benefit they provide to the client. I’ve been an advisor for 30 years and I’ve had maybe a dozen ask about how much I get paid.”

“I don’t think it’s any of their business, but I do it anyway. If they’re not happy, there’s the door. But we should start treating clients like they’re adults.”

The data also suggest advisors continued to reduce the average number of clients they serve as the number fell from 156 in 2013 to 150 in 2014. At the same time, average client assets increased to $628,000 from $562,000, according to the report. That too is a concern, say embed guys, pointing to a trend that could see access to advisors reduced for middle-class investors with smaller investible assets.

Methinks there is just too much "smoke and mirrors" and innuendo here - and not just in the embedded fees model, either. Both options are already there - let the clients decide which suits them better.

My Dr has about 2,000 patients, and the responsibility she has is fiduciary. No one says she must only have 150 patients. She is paid whenever I come in and she never disclosses to me what she is paid from either the government or any corporation or anyone else.